The Federal Home Loan Mortgage Corp. is relaxing its guidelines when it comes to funds and securities that are utilized for down payments and reserves.
For borrower funds and reserves — proof of liquidation will no longer be required for stocks, bonds, mutual funds, U.S. government securities and other securities.
The change applies when the combined value of the assets is at least 20 percent more than the assets that are needed for closing, according to Freddie Mac.
The secondary lender described the updates in bulletin No. 2015-20.
A limitation that no more than 70 percent of the value of a retirement account can be utilized for reserves is being eliminated, according to the McLean, Virginia-based firm.
Freddie is also adding vested stock options as an eligible source of borrower funds and reserves. This, however, is
subject to minimum documentation requirements.
On transactions with a loan-to-value ratio of more than 80 percent involving a non-occupant borrower, Freddie will no longer require a minimum 5 percent down payment from occupant-borrower funds.
The updates become effective on
loans with settlement dates on or after Dec. 14.
